Jack Dorsey is facing further criticism over claims that artificial intelligence (AI) was behind his decision to fire 4,000 employees at the payments company.

The CEO faced backlash last month after saying AI was behind a decision to lay off nearly half of Block’s workforce, with critics suggesting the company's bloated structure and unsuccessful push into crypto were the real reasons.

Dorsey denied these claims, saying he did not make the decision “because we’re in trouble” but rather because AI tools “are enabling a new way of working which fundamentally changes what it means to build and run a company.”

Block’s shares rose sharply following the announcement after months of falling prices, suggesting his bet may be paying off. However, some laid-off and current employees are now coming forward with statements casting further doubt on Dorsey’s explanation.

Naoko Takeda, who was a data scientist at Cash App, one of Block’s products, said in a viral post on LinkedIn that AI tools used in the company were not at the level that would justify the elimination of so many roles.

“Personally, I saw very limited gains in productivity from AI, nothing nearly profound enough to justify tossing out half of the company's workforce along with their institutional knowledge and expertise,” Takeda said.

However, she said that AI was “shoved down everyone’s throats” anyway, and employees were told to use it as much as possible.

“It’s nothing short of dystopian to be forced to employ the very tools that accelerate the disappearance of the jobs on which our livelihoods depend,” Takeda said, noting that she quit after layoffs were announced despite being offered almost double the pay to stay.

The remaining workers say they are expected to pick up the slack as entire teams are decimated and are in a “survival mode,” according to The Guardian, which spoke to seven former and current employees on condition of anonymity.

They described morale as being “in the gutter” and shared Takeda’s assessment that the AI tools used at Block are nowhere near replacing humans – despite the company’s efforts to use its employees to train machines that could one day take their jobs.

Many felt the cuts were Dorsey “posturing for the market” and his way of winning back investor confidence after heavy investments in an unstable cryptocurrency market, according to The Guardian.

Blame it on AI

Block is not alone in blaming layoffs on AI. Pinterest said it was laying off 15% of its staff due to AI in January, and Australian software company WiseTech announced in February that it was letting go of a third of its workforce for the same reason.

Amazon announced 16,000 additional job cuts, on top of 14,000 white-collar roles eliminated in the previous round of layoffs announced in October last year, while eBay said it is laying off 6% of its workforce, or about 800 people.

Enterprise software company Oracle is planning thousands of job cuts as it faces a cash crunch from a massive AI data center expansion effort, Bloomberg News reported last week.

While there is little doubt that AI will shake up the labor market, OpenAI CEO Sam Altman said last week that some companies appear to be engaging in “AI-washing,” falsely attributing AI as the reason for layoffs.

According to Altman, the real impact of AI on the job market will become palpable over the next few years, with new roles emerging to replace those made obsolete.

US companies announced 48,307 job cuts in February, according to outplacement firm Challenger, Gray & Christmas. It was down 55% from the 108,435 job cuts in January, the highest number for that month since 2009.

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